The Chancellor has announced some stamp duty cuts to benefit homebuyers, as well as tax cuts for workers and businesses. Find out what the key changes are and how they might affect you.
Whether you’re a first-time buyer or an existing homeowner seeking a new property, there’s some good news for you where stamp duty is concerned. In the mini-budget revealed today, Chancellor Kwasi Kwarteng announced some cuts to stamp duty to benefit homebuyers:
• The nil rate band stamp duty threshold has increased from £125,000 to £250,000. This means homebuyers will pay no stamp duty on the first £250,000 of a property’s value.
• There’s also good news for first-time buyers. First-time buyers will now pay no stamp duty on the first £425,000 of a property’s value. Previously the threshold was £300,000.
There have also been some tax changes to benefit workers. The basic rate of income tax will be reduced from 20% to 19% from April 2023. The Chancellor said it’s important to ‘make work pay’, and those on universal credit will be expected to seek ‘more and better-paid work’ with a view to having their benefits reduced.
The Chancellor added: ‘High taxes reduce incentives to work and deter investments and hinder enterprise. We will review the tax system to make it simpler and fairer for families.’
Kwarteng has also ditched the top rate of income tax of 45% and says the UK will have a single higher rate of income tax of 40%.
There was also some good news for businesses. The planned increase in corporation tax will be cancelled. There will be no increase to 25%, and corporation tax will remain at 19%.
The planned National Insurance rise of 1.25% will be scrapped from November, which the Chancellor predicts will save workers an average of £330 per year.
Other cost-saving benefits to consumers include energy changes. The Energy Price Guarantee will cap the price consumers pay for gas and electricity. This means that the average household bill is likely to be limited to £2500 per year. The Chancellor estimates this will save households £1000 per year. In addition, the government still plans to give all households £400 off their energy bills this winter.
The Chancellor also mentioned an Energy Bill Relief scheme which will reduce gas and electricity prices for charities, schools and hospitals and provide a price guarantee equivalent to the one provided for households across the country.
There will also be an Energy Market Financing Scheme which will give loans to energy suppliers. The Chancellor said the scheme will provide a 100% guarantee for commercial banks to offer emergency liquidity to energy traders to support them.
Finally, in relation to the Bank of England’s latest base rate increase yesterday (the rate went up from 1.75% to 2.25%), the Chancellor credited the Bank of England for taking steps to control inflation and said the government will remain in close contact with the bank on a weekly basis.